Earnings call: IntelGenx highlights RIZAFILM launch, seeks new EU partner

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Gorham also provided insights on the progress of their buprenorphine buccal film program, cannabis business developments, and ongoing clinical trials. CFO André Godin outlined the financial results, including revenue, operating costs, and losses, and highlighted the launch of a Reg A offering to fund future growth. The company anticipates several milestones in the coming year, including the launch of RIZAFILM in the USA and the initiation of new projects under the CDMO business model.

In conclusion, IntelGenx’s earnings call painted a picture of a company in the midst of advancing its product pipeline while navigating financial challenges. With the anticipation of new partnerships and the launch of its products, IntelGenx is working to establish a stronger position in the pharmaceutical film market. The company’s strategic focus on its CDMO services and efforts to secure new commercial partners in Europe are critical steps towards achieving its revenue goals and driving future growth.

IntelGenx Technologies Corp. (IGXT) has shown a mixed financial performance over the last twelve months as of Q1 2023. The InvestingPro Data illustrates some key metrics that can help investors understand the company’s current valuation and financial health:

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For a deeper analysis and more InvestingPro Tips, investors can visit https://www.investing.com/pro/IGXT, where there are 11 additional tips available. These insights can provide a more comprehensive understanding of IntelGenx’s financial and operational outlook. And don’t forget, you can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering you an even greater value as you explore the potential of IntelGenx Technologies Corp. in the pharmaceutical film market.

Operator: Greetings. Welcome to the IntelGenx Fourth Quarter and Full Year 2023 Results Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Stephen Kilmer, Investor Relations at IntelGenx.

Stephen Kilmer: Good morning, everyone, and thank you for joining us on today’s call. With me on the line are Dwight Gorham, IntelGenx’s CEO; André Godin, our President and CFO; Dr. Frank Pietrantonio, our Director of Clinical Research; and Tommy Kenny, our Senior Vice President and General Counsel. Before we begin, I would like to remind you that all amounts mentioned today are in U.S. dollars unless otherwise mentioned, and today’s call may contain forward-looking information that represents our expectations as of today and accordingly are subject to change. We do not undertake any obligation to update any forward-looking statements, except as may be required by U.S. and Canadian securities laws. A number of assumptions were made by us in preparing these forward-looking statements, which are subject to risks and results may differ materially. Details on these risks and assumptions can be found in our filings with the U.S. and Canadian Securities Commissions. I would now like to turn the call over to Mr. Gorham. Dwight?

Dwight Gorham: Thank you, Steve. Good morning, everyone, and thank you for joining us for the IntelGenx Fourth Quarter and Full Year 2023 Conference Call. On today’s call, I will provide a corporate update and discuss the progress we have made on our key pipeline projects consistent with what we have previously committed to shareholders. Then Andre will review our financial results. Following that, we will open up the line for your questions. I will now update you on our key programs, beginning with RIZAPORT. During the third quarter of 2023, we received the first purchase order for the RIZAFILM, the U.S. market name for RIZAPORT, from our commercial customer, Gensco Pharma. This represents a significant milestone for the company. as it was our first purchase order for the commercial supply in the pharmaceutical oral film. We commenced production in December 2023 and expect to ship the ordered RIZAFILM product to Gensco in Q2 2024 for immediate launch to market. Unfortunately, as of the end of 2023, we saw no appreciable progress by Exeltis, our partner for RIZAPORT in Spain. Consequently, by mutual agreement with Exeltis, we have jointly started the process of finding a new commercial partner with production promotion capabilities ideally suited to maximize RIZAPORT’s commercial success on the European market and expand the product’s commercial availability in EU markets beyond Spain. Turning to our buprenorphine buccal film program, we understand from Xiromed, the agent and affiliate of our co-development partner, Chemo Research, that is still in discussion with the FDA regarding the amended abbreviated new drug application submitted to the agency in September. We will, of course, update investors on the status of the ANDA as additional information becomes available. Now turning to our cannabis business. We are happy we have entered into a settlement agreement with Tilray (NASDAQ:TLRY) in November. The settlement included a purchase order for 3 new products, namely CBD20, THC10 and a 10-10 combined CBD-THC. Due to subsequent requests by Tilray, we should be in a position to complete the updated formulation work by May, June, and the products will then be scheduled for production and delivery. Turning to Animal Health. We are delighted to advance that important business via development and licensing agreements signed in December with a wholly owned subsidiary of Covenant Animal Health. Under the terms of the development agreement, Covenant Animal Health will fund development and manufacturing of the VetaFilm-based drug product. The license agreement will give Covenant Animal Health exclusive rights to exploit the product in the field for nonhuman applications. In return, IntelGenx will receive royalties on a worldwide net sales of the product. Ahead of commercialization, IntelGenx will manufacture the product on a worldwide basis for clinical development. The parties also anticipate entering into a subsequent commercial supply agreement, pursuant to which IntelGenx will supply the product to covenant Animal Health. As much as we are excited by this current partnership with an industry leader like Covenant Health, we also think that it could eventually prove to be an important revenue inflection point for our overall VetaFilm business. Covenant is a well-recognized player in this space, and as such, the partnership should help open up doors to several additional commercial opportunities for proprietary VetaFilm drug delivery platform as it advances towards becoming a standard administration method for companion animals in the future. In support of that, last month, we unveiled very encouraging results from a VetaFilm proof-of-concept study, which was conducted through a research collaboration with UPEI, one of North America’s leading veterinary universities. As we have discussed in the past, the reliable administration of medications to dogs and cats is a concern for many owners and veterinarians. As I am sure many of you can say, there are a few prescription medications that dog and cat will legally accept and force administration of capsules, tablets and liquids may be stressful for both the pet and its owner or owners. Additionally, many owners report that medicating the pet becomes more difficult with each dose, often leading to decreased owner compliance, missed doses and potentially treatment failures. The purpose of the research collaboration with UPEI was to assess palatability, owner-perceived acceptability and ease of administration of the VetaFilm to healthy dogs and cats. Specifically, the study evaluated one, acceptance rate of various VetaFilm placebo formulations in dogs and cats at first exposure; two, preference between flavors of VetaFilm placebo formulations in dogs and cats; three, changes in accepted rates over longer periods; and four, owner perception of ease of administration and acceptance and other behaviors associated with VetaFilm placebo formulations. Overall, 100% of dog owners and 67% of cat owners felt the administration of VetaFilm’s oral films was very easy or easy and 95% of dog owners and 82% of cat orders identified VetaFilm as the preferred method of medication administration. Moving on to R&D. We have completed dosing in the BUENA Montelukast VersaFilm IIa clinical trial in patients with mild-to-moderate Alzheimer’s disease this month, and expect to report initial trial results next quarter. Additionally, having now received approvals from the Swedish Medical Products Agency, the Swedish Ethical Review Authority and the regional biobank center to conduct a MONTPARK Montelukast VersaFilm Phase II clinical trial in patients with Parkinson’s disease. We currently expect dosing in the study to be initiated before the end of the current quarter. The multicentered, randomized, double-blinded placebo trial, which is designed to assess Montelukast’s VersaFilm as an alternative to the tablet for of Montelukast will be conducted at the Karolinska University Hospital in collaboration with principal investigator, Dr. Per Svenningsson who will respond to the study through a Swedish Research Council grant worth approximately USD 2 million. Finally, earlier this month, the Phase Ib trial for our oral transmucosal film formulation of DMT was initiated. The Phase Ib study is designed to evaluate the relative safety, tolerability, pharmacokinetics and pharmacodynamics of an optimized film formulation compared to intravenous DMT. Top line results for the Phase Ib study are expected in the second half of this year. With that, I would like to turn the call over to Andre for a review of our financial results. Andre?

André Godin: Thank you, Dwight. Good morning, everyone. As Dwight mentioned, I’ll take a few minutes to discuss the company’s financial performance for the fourth quarter as well as the full year — fiscal year ended December 31, 2023. For the fourth quarter, the total revenue amounted to $426,000, an increase of 146% over $173,000 for the same 3-month period last year. The change is mainly attributable to an increase in R&D revenue. Our operating costs and expenses were $2.4 million for Q4 2023 versus $2.7 million for the corresponding 3-month period of 2022. For Q4 2023, the company had an operating loss of $2 million, down from $2.5 million in Q4 2022 as well as adjusted EBITDA, which was negative $1.7 million for Q4 2023, a similar improvement over negative $2.3 million for Q4 2022. Our net comprehensive loss improved to $1.7 million or $0.01 on a basic and diluted per share basis for Q4 2023 compared to $2.3 million or $0.01 per basic and diluted share for the comparable period of 2022. For the full year of 2023, total revenue amounted to $1.039 million compared to $950,000 for 2022. The full year operating cost were $10.5 million for 2023 versus $10.4 million for 2022. For the full year 2023, the company had an operating loss of $9.5 million compared to an operating loss of $9.4 million for the comparable period of 2022. Net comprehensive loss was $10.1 million or $0.06 per basic and diluted shares for 2023 compared to $11.5 million or $0.07 per basic and diluted share for the comparable period of 2022, an improvement of $1.4 million. As of December 31, 2023, the company’s cash and short-term investments totaled $2.3 million. Subsequent to the year-end, IntelGenx announced the launch of a Reg A offering of up to 2 million shares of non-traded Series A convertible cumulative preferred stock at an offering price of $10 per share or a maximum offering amount of $20 million. As we’ve discussed in the past, we’re always trying to balance our financing needs with the goal of limiting current shareholder dilution as much as possible. After exploring several potential financing opportunities and structures in the current market of small cap and micro cap health care companies, we feel this offering provides us with the best opportunity to raise funds at a valuation that we believe is more reflective of our assets and business prospects. As we mentioned in our press release announcing the offering, with the pending U.S. commercial launch of RIZAFILM next quarter, we will be entering into a phase of anticipated rapid growth. This rate will allow us to support that while we also continue to make strategic investments in the advancement of the rest of our product pipeline and service portfolio. I will now turn the call back to Dwight.

Dwight Gorham: Thanks, Andre. We are looking forward to continuing to execute on our key programs and to deliver on the upcoming milestones we have discussed today. To reiterate, they are one, the launch of the RIZAFILM in the USA; two, finding a new commercial partner for the RIZAPORT in Spain and additional markets in Europe; three, reporting initial results of the Phase II BUENA Montelukast VersaFilm trial in moderate-to-mild Alzheimer’s disease; four, initiating subject dosing in the MONTPARK Montelukast VersaFilm Phase II clinical trial in patients with Parkinson’s disease; and five, completing our Reg A preferred share offering. Finally, speaking of our services business, I’m pleased to report that the new development project pipeline is highly active with several parties having confirmed interest in IntelGenx performing development work on their behalf on a fee-for-service basis. We expect to initiate 3 to 5 new development projects under the CDMO business model during the course of 2024, and our new business development efforts are on their way to accomplishing this goal. With that, I will now turn the call over for questions. I would like to remind you that our forward-looking statements apply to both our prepared remarks and the following Q&A. Thank you.

Operator: At this time, we will be conducting a question-and-answer session. [Operator Instructions] Your first question for today is from Hugh Kyle, a private investor.

Unidentified Analyst: Good update Dwight of the activities of IntelGenx. Just wondering would you give a overview of the rollout of RIZAFILM to the pharmacies in Q2?

Dwight Gorham: I’m sorry, Hugh, you broke up a little bit. You’re asking me for the — what’s the rollout plan for the pharmacy?

Unidentified Analyst: Yes, that would be — if you could share that, that would be great because I’ve been checking my local pharmacies, they just say it’s coming, but couldn’t give a specific date.

Dwight Gorham: That actually should happen sometime, I’m guessing, and I’m not talking on behalf of Gensco because they control the final date when that goes, sometime in the month of May, I suspect, but that’s a professional opinion based on when I’m going to ship the product.

Unidentified Analyst: Okay. That’s good. And is there any further update of any additional countries beyond the EU that you’ve already highlighted, [indiscernible] or China or any of the other potential partners globally?

Dwight Gorham: At this point, for the reason, no, Hugh. As I said, our focus right now is finding a new partner that will service the 5 major markets in Europe at this point. Replacing our Spanish person who was supposed to be able to reach the 5 — the big 5 in Europe.

Unidentified Analyst: Okay. Thank you for that response. And any update on the progress of tadalafil? I know there was on the plan for that with the irritation study.

Dwight Gorham: There is no further update on that. We’re still going — still working on that, but still issues to be resolved.

Unidentified Analyst: Okay. And returning back to RIZAFILM progress on the pediatric film submission to the FDA?

Dwight Gorham: Nadine, do you want to handle that?

Nadine Paiement: Yes. So the pediatric film, the 5-milligram will be manufactured with the validation batches, and then we need stability data before submission. So most probably later this year.

Unidentified Analyst: Okay. And just a little bit of overview of the Belbuca with the FDA, is any major issues in that Dwight? Or do you think those are just sit down and clarify clarification issues?

Dwight Gorham: I know that the customer, the partner is in discussion with the FDA, and we’re expecting communication in that regard in the relative short term in the next 3 to 4, 5 weeks. But at this point, I don’t know that there’s — I don’t know what the issues are. Hugh. It’s really between Xiromed and the FDA. And as soon as they know, they’ll let us know. And if it’s announceable, I will absolutely be about transparent with that.

Unidentified Analyst: Okay. And before I go back in the queue with the Endo bankruptcy plan proved any insights into the status of the future of the [indiscernible] product?

Dwight Gorham: I very recently had further conversations with representatives from Endo. And those discussions are early in the game plan, but we’re looking to find a path forward for specifically the specific products you’re referring to. But at this point, I have no clarity on what’s absolutely required. We have partners looking for it. we have potentially someone who may be interested in optimating a deal for, but that’s way too immature for us to comment further.

Unidentified Analyst: Okay. I appreciate that comment. And with the Montelukast trial ending, is the submission to the neutral party who does all the data analysis when the data comes back, if positive, which we expect then with the — will that data to be rolled out or seek a patent first. I know it’s kind of a strategic question, but everyone’s really watching that.

Dwight Gorham: Well, it depends on what the data is and how it looks. We get the data in May. And depending on that, if it’s good [indiscernible] meeting with health authorities, et cetera. to establish what the clinical and regulatory strategies need to be to move it forward. At this point, we’re still — we do not have the data yet. It’s all the — numbers are being crunched, but it’s not available.

Unidentified Analyst: Okay. Last question on the Tilray products — is it possible to reveal — is that going to Canada? Or is that going to some other global countries?

Dwight Gorham: Are you still talking Montelukast, Hugh? Sorry.

Unidentified Analyst: No, the Tilray, the 3 products you’re developing for Tilray, is that for Canada?

Dwight Gorham: Tilray? Yes, those are for Canada.

Unidentified Analyst: The last of my questions, loxapine, is that any chance of that progressing forward? Is that still in the queue pending all of the other activities you have going on?

Dwight Gorham: Well, it’s a twofold piece to loxapine, One, it’s in the queue because there’s other things we’re focusing on; and b, the market does not appear strong in the U.S. at this point for that product. We’re trying to sort that part out.

Unidentified Analyst: Okay. Thank you, Dwight. And good – very good progress report, especially with all the activities in the VetaFilm and the CDMO world that you indicated prior quarters.

Operator: Your next question for today is from Brent Gakie, a private investor.

Unidentified Analyst: Just a couple of questions. Do you have any revenue projections on the Tilray products?

Dwight Gorham: Andre, do you want to handle that?

André Godin: Yes. I mean the initial order is 400,000 films. So it’s — and so the revenue would roughly be anywhere between $200,000 and $300,000, but we’re expecting some repeat. But for the initial order, that would be the revenue — or the expected revenue.

Unidentified Analyst: Okay. And then do you all have any projections on RIZAFILM? I know you all said you’ll anticipate rapid growth, but do you have any idea what that looks like?

André Godin: Yes. I mean, unfortunately, we don’t give the guidance, but what we can say is that what the initial forecast was determined by Gensco seems to be very conservative based on our latest discussion. So we’re expecting these numbers be to be much better. But we still need to wait and see how the launch will go and all the repeat orders will come in. But it could be very decent revenue. But since we don’t really give guidance, I don’t want to throw out numbers here, but it will be several million dollars of revenue for sure.

Unidentified Analyst: Okay. And then given that with this latest round of financing, once that’s completed and the other projects in the full generating revenue, do you expect that to be the last — last time you’ll need to raise money?

André Godin: For — technically, if everything goes accordingly for RIZA, we’ll know a little bit more about Belbuca or buprenorphine in the short term. It should be, but there will be some expansion in terms of our facility to come at some point because if the volume that we are told that we will have to manufacture for both RIZAFILM and especially buprenorphine, we might be running out of capacity sometimes in ’25 or ’26. So there could be an expansion, but that would probably not be funded to equity, we’re looking at different scenarios, maybe bank loan, government support, maybe a partnering support. So there are different ways that we’re looking at it. Most likely, we wouldn’t have to raise equity. But that’s where we think we are at this point, but it will depend on — obviously, on the launch date and the numbers that we’ve been told. If they meet those numbers, we might be facing that sooner than later.

Unidentified Analyst: Well, that would be a good thing if that happened.

Operator: Your next question is from Abraham Shapiro, a private investor.

Unidentified Analyst: Congratulations, some exciting news going forward. I’m still looking for more revenue. A couple of my questions were really asked. But as far as the walking away from Exeltis, they held us up for — you guys up for a couple of years now. Is there legal issues finding a new partner? Are they obligated in any way that they didn’t perform their agreement?

Dwight Gorham: I’ll let Tommy comment if I don’t fill in the blanks properly, but I do not believe there’s any legal obligation on their part, nor are there any barriers to us finding a new partner. In fact, Exeltis will work with us to help identify the partners. They’ll be active in the identification but not the selection of the partners.

Unidentified Analyst: Okay. A couple of my questions were already asked. But the — in regards to VetaFilm, when the approval process for veterinary products, is that quicker than the — is it FDA or another body? How does that work when we finally get some product?

Dwight Gorham: The approval process should be slightly quicker. I’ll let Nadine comment on whether — it’s similar to the FDA process, just I believe a bit shorter.

Nadine Paiement: It is an FDA process. The requirements are highly similar to what we do for humans, so we should expect something very similar to what we see for new drug approval.

Unidentified Analyst: So new drug. So when can we see a better film product getting approved to market?

Nadine Paiement: That’s highly dependent on the partner and the speed at which they run the requirement in terms of clinical and stability studies for the approval of the product.

Dwight Gorham: We shouldn’t expect it to happen in the next — it’s not going to happen in the next 2 years.

Unidentified Analyst: 2 years. So that’s a long-term — short term but long term.

Dwight Gorham: Short term, there’s good development revenue in there, but commercial revenue will be beyond 2 years.

Unidentified Analyst: Beyond 2 years right. And what about after the Parkinson’s study, if that’s proved successful, what’s the next — what do we do next with that?

André Godin: Well, as I said, we sit down with the agencies and review the data to understand what’s required for the next phase in the clinicals in the next phase. And in all likeliness, you would potentially look for a partnership opportunity for the product.

Unidentified Analyst: The same with Montelukast, you had good results from — we have any partnership potential with that one going on?

Dwight Gorham: At this point, no, we’re sitting waiting for the data. I mean everybody’s kind of on pins and needles waiting to see what the data pool looks like.

Unidentified Analyst: All right. Best of luck going forward and with the rates as well? That’s all I got.

Dwight Gorham: We certainly want — we certainly — when we know what the data looks like, we’ll be looking to ensure that everybody understands we’ve got good news or bad news 1 way or the other.

Unidentified Analyst: And when is that expected?

Dwight Gorham: We should get the data by the end of May.

Unidentified Analyst: All right. Good luck with that. That’s all I got.

Operator: Your next question is a follow-up question from Hugh Kyle.

Unidentified Analyst: With the Tilray, the initial 3 products, do you anticipate further orders for them or any of the products under development with Tilray.

Dwight Gorham: I think Andre specifically said, we do anticipate the potential for further follow-up orders on these 3 products. And as of this date, there’s been no advanced conversations on additional products.

Operator: Your next question is from Trevor Lee, a private investor.

Unidentified Analyst: I was curious if you had any just like results from the raise, like how far along you are or if you’re going to do the full $20 million before closing it? Or would you close it earlier? Or kind of what’s the update there?

Dwight Gorham: Andre, do you want to take that?

André Godin: Yes . Thanks. Yes, we started the process, and it’s a digital offering. So it’s mostly happening online. And the subscription, everything can be done online. So there’s a lot of newsletter articles that will be published. I mean most of the action or the main spending or exposure will happen in the next, I would say, 2, 3 weeks. But there is a possibility to have a role in closing, which means we won’t wait until we reach our objective. Our objective is anywhere between $10 million and $20 million. We might close when we reach $2 million or $3 million, that’s the plan anyway. So we have 12 months. But the plan is to probably get everything done by August, latest September. So — but as soon as we have made let’s say, $2 million, $3 million, we would make a first closing and then continue the process and then close another one. So we — there is no limit as to how many closing we can do.

Unidentified Analyst: Okay. And then I guess, is there any way to provide just more color on the CDMO stuff? Like what kind of some of the potential partnerships and whatnot will entail? Like is that just packaging their products? Or is that doing R&D for them? Or how does that work?

Dwight Gorham: The CDMO specifically is focused on doing the initial development work with the customers and then keeping the manufacturing rights going forward. So the ones that we’re in conversation with are all specific molecules where we will do the vast majority of the development work. They’ll do the registrations and we’ll keep the manufacturing rights.

Unidentified Analyst: Okay. And then are there any products from might get launched in the next year or 2? Or do you think it’s further out than that? If some of the deals go through.

Dwight Gorham: I think they’re further out than that. The big deal in the short term for commercial is RIZA and the Belbuca. Those are the 2 major focus points on commercial sales. And then the other part is building up the development side of the revenue base that ensures we have a manufacturing platform going forward.

Unidentified Analyst: Okay. And then on the manufacturing side, do you have like a relative revenue amount kind of that we could pull in with this before expanding maybe on like an annual basis?

Dwight Gorham: I’m going to refer back to Andre’s point, that we don’t give forward speculation on the sales. So at this point, I’m not in a position to actually make that comment.

Unidentified Analyst: Okay. I think that’s all I have for right now. Thank you.

Operator: Your next question is a follow-up question from Hugh Kyle.

Unidentified Analyst: Last one way, Dwight, I promise you, is any [indiscernible] got to keep a tab of my questions. Any update of investment houses issuing a research report based upon the good progress you made over the past couple of years and the path forward?

Dwight Gorham: At this point, I’m not aware of that, Hugh. Maybe Andre is, but I am not. And I think the real focus on management is stick to the knitting, drive the commercial line and fill up the development portfolio for future years of manufacturing. So that’s what we’re really focused on. But I’ve not heard that any analyst is going to pick this up yet.

Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Dwight for closing remarks.

Dwight Gorham: Yes. Thank you very much for all of the questions. Hopefully, the answers provided a certain amount of guidance to you. This concludes our fourth quarter and full year 2023 investor call update. I would once again like to thank the entire IntelGenx team for its hard work and dedication, our Board of Directors for their continued support of the management team and finally, our investors for continuing to believe in and supporting us. Thank you, and goodbye.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.

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